Is the cheapest loan always the best choice?

2 min read

Cheapest = startNot the finish

Terms matterERC, speed, flexibility

Fit to your needNot just price

Compare, then weighPrice first, terms second

Start with price, properly measured

Price should lead the decision — but measured correctly, as total repayable on comparable terms, not headline rate. Get that right and you have the honest ranking of which loan is cheapest. That ranking is where the decision starts. It is not, on its own, where it should end.

The terms that can outweigh a small price gap

Several terms can justify choosing a marginally dearer loan. An early-repayment charge matters if you may repay early. Flexibility to overpay or redraw matters if your cash flow is lumpy. Funding speed matters if the opportunity is time-sensitive. A requirement for a personal guarantee may weigh against a cheaper secured deal. Where a small price gap buys a materially better fit, the dearer loan can be the right one.

How to decide

Rank the offers on true cost, then look at the terms behind the top two or three. If the cheapest also has the terms you need, take it — that is the common case. If a slightly dearer option removes a charge or adds flexibility that genuinely matters to your situation, the small premium can be worth it. Price first, terms second, in that order.

Compare true costs on the true cost calculator, and for a clean, flexible quote to weigh, apply to Credicorp.

Frequently asked questions

When is a more expensive loan the right choice?

When a term that matters to your situation outweighs the small extra cost — no early-repayment charge if you might repay early, the flexibility to overpay or redraw, faster funding for a time-sensitive deal, or avoiding a personal guarantee. The premium has to be modest and the benefit real. For most straightforward needs, the cheapest well-measured loan is still the right one.

How big a price gap justifies choosing on terms?

There is no fixed threshold — it depends on how much the term is worth to you. A small gap in total repayable is easily justified by a flexibility or speed benefit you will genuinely use. A large gap needs a correspondingly strong reason. Quantify the price difference in pounds first, then judge whether the better terms are worth that specific amount to your business.